Investment community failing start-ups says report
"The venture capital industry has been criticized in a joint US/European report that says it is ignoring early-stage start-ups and is instead investing in more mature companies. The report asks governments on both sides of the Atlantic to do more to increase the flow of investment to early-stage firms.
According to the report, produced by a joint working group set up between the US Department of Commerce and the European Commission, this lack of investment in early-stage start-ups represents a "fundamental market failure." The findings call for more public sector and policy maker involvement in the VC process. The working group is made up of representatives of venture capital funds, industry advisers, academics, and specialists.
The report warned that the failure of the VC market on both sides of the Atlantic is so significant that public intervention is desirable. It also suggested that public money should go to large, well-established funds that can command economies of scale, rather than creating a proliferation of small funds.
"Small firms need investment capital but the market has failed to provide it - public sector support is needed," the report stated. "The work of the group confirmed that there is a fundamental market failure in the provision of early-stage financing in both the US and the EU. Venture capital funds are concentrating on larger and larger deals, leaving the small and risky early-stage deals aside.""
According to the report, produced by a joint working group set up between the US Department of Commerce and the European Commission, this lack of investment in early-stage start-ups represents a "fundamental market failure." The findings call for more public sector and policy maker involvement in the VC process. The working group is made up of representatives of venture capital funds, industry advisers, academics, and specialists.
The report warned that the failure of the VC market on both sides of the Atlantic is so significant that public intervention is desirable. It also suggested that public money should go to large, well-established funds that can command economies of scale, rather than creating a proliferation of small funds.
"Small firms need investment capital but the market has failed to provide it - public sector support is needed," the report stated. "The work of the group confirmed that there is a fundamental market failure in the provision of early-stage financing in both the US and the EU. Venture capital funds are concentrating on larger and larger deals, leaving the small and risky early-stage deals aside.""
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